Last week’s job numbers have had a big impact on this week’s main topic of discussion: reopening. Communities around the country are starting to establish guidelines that will, hopefully, allow more folks to get back to work while also keeping the spread of COVID-19 in check.
In the meantime, folks who are hurting are starting to get some relief via extended unemployment benefits and federal tax rebate checks. Others are weighing new options created by the CARES Act, including coronavirus-related distributions (CRDs). If you’re thinking about using your retirement assets to navigate the pandemic, you’re definitely going to want to listen to our discussion on how CRDs may help.
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1. The markets are up …
The actions taken by the Federal Reserve and the passage of the CARES Act have helped to stabilize the financial markets. However, as we’ve discussed previously, the way that big numbers like the Dow Jones and the S&P 500 are weighted creates an imperfect picture of our economy. Yes, as I write this, big tech stocks are positive for the year. But there are still many parts of the economy that are really hurting, such as restaurants and other service industries.
2. … but so is unemployment.
Even more painful are the most recent unemployment figures: 33 million lost jobs and 14.7% unemployment since the COVID-19 outbreak. Most investors were already anticipating some sobering jobs numbers, which is why the market didn’t react too negatively to the news. We’re hopeful that the CARES Act and other aid packages are starting to help more folks through this tough time, and that a good number of these jobs will be refilled quickly as the country starts to reopen. However, COVID-19 is also accelerating a trend that’s pushed more and more folks into an unexpected early retirement in recent years.
If you’re dealing with a job loss, furlough, or early retirement, step one is to assess your financial situation by listing your liquid assets, including your emergency fund. That baseline financial picture is going to help you decide what to do about things like health insurance and whether to tap into your retirement accounts or Social Security for extra help.
3. New distribution options for 2020.
As we’ve discussed before, the CARES Act eliminated required minimum distributions (RMDs) for 2020. But if you’ve been affected by COVID-19, you may qualify for a coronavirus-related distribution (CRD) which will allow you to withdraw up to $100,000 from your retirement accounts this year. Depending on your situation, you might be able to stretch out the taxes on that $100,000 over a three-year period, or pay it back into your account later.
Remember, none of these decisions should be automatic. There’s no “one size fits all” solution to any financial challenge, including COVID-19. Making the most out of the options available to you requires careful consideration of every aspect of your financial life. Before you make any decisions let’s schedule a video chat so that we can plot the best course forward together.
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Bill Keen is a CHARTERED RETIREMENT PLANNING COUNSELOR℠ and independent financial advisor with more than 25 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he specializes in providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.
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